Law: Income Tax Act, 1961

Section: 144

Income-tax-- Best assessment -Assesses not entitled to be heard in respect of material gathered by enquiry and proposed to be used for assessment. 96 I T R 148 (Ker.) and (1965) 58 I T R 871 ref. JUDGMENT SABYASACHI MUKHARJI, J.--In this reference the following question has been referred to us by the Tribunal :- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that before making an assessment under section 144 of the Income-tax Act, 1961, the assessee should be given an opportunity of being heard under section 142(3) of the said Act, in respect of any material gathered on the basis of enquiry made under section 142(2) and proposed to be utilised for the purpose of assessment and on that view in confirming the order of the Appellate Assistant Commissioner setting aside the assessment made under section 144." 2. The assessment years involved in this reference are 1967-68, 1968-f;9 and 1969-70. In the assessment year 1967-68 the assessee submitted a return under section 139(2) showing a loss of Rs. 23,550. The Income-tax Officer issued a notice to the assessee under section 142(1) requiring the assessee to produce the statutory books but the assessee committed default and the income-tax Officer made an assessment under section 144 of the Income-tax Act, 1961. The assessee had claimed that it purchased Samabeong Tea Estate ,n 1963. It did not disclose any income up to 1965 from the Tea Estate. It also failed to produce the sale-deed in its favour and satisfy the Income-tax officer that there was any agreement between the assesses and the seller Aessrs Padma Ltd. by which the latter was to run the estate. The Income-tax Officer found that there was litigation between Shri K. R. Agarwal, Principal Director of the assessee and members of his family and on the basis of an kward, the Tea Estate was allotted to him and also share capital of the ~ssessee. The Income-tax Officer was of the view that the assessee company was cent per cent owned by Shri K. Agcrwal. He, however, proceeded to assess the income of the Tea Estate in the bands of the assessee as the assesses ;)aimed its ownership. The assessee produced account books…

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